A controversial insurer in China has warned the country’s regulator of defaults worth billions, and possible unrest, if its ban on releasing new products is not lifted.
In December last year, the China Insurance Regulatory Commission (
CIRC) penalized Foresea Life Insurance, prohibiting it from releasing new products over its management of customer information and accounts. Foresea’s chairman Yao Zhenhua was also banned from the insurance industry for 10 years for allegedly misusing insurance funds.
In a letter addressed to the CIRC dated April 28, Foresea Life Insurance asked the regulator to lift its ban “in order to avoid inciting mass incidents by clients and localised and systemic risks, producing greater damage to the industry,” reported the
Financial Times. The term “mass incidents” usually refers to protests or riots in Chinese parlance.
Foresea added that it expects redemptions of around US$8.7 billion this year, and it might not be able to meet the payouts if it is not allowed to sell new products.
The insurer is a unit of Baoneng Group, a property and financial conglomerate that was embroiled in a scandal last year when it attempted a hostile takeover of China Vanke, one of China’s largest residential developers, partially funded using Foresea’s assets.
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